4 min read.
Jeffrey is the Founder & CEO of PatSnap, a SaaS platform that provides patent and innovation intelligence. The following edited excerpt is taken from a collaborative webinar with our partner, Startup Grind Singapore, held on 24 September 2020.
Could you take us to the beginning, when did you get this idea and how did you see the opportunity in the market for Patsnap?
Jeffrey: When I was still studying in National University of Singapore, there was an entrepreneurship internship program where they send entrepreneurial-minded students to the US to work full time in a local start-up and study part time in a local business school. Fortunately, I was selected and sent to Philadelphia and because of my background in bioengineering, I was sent to intern in a medical device start-up and studied part time in Wharton Business School of The University of Pennsylvania. I was working in the medical device start-up, I got my first exposure to intellectual property (IP) patents because in the medTech environment, protecting your IP is key. With that one and a half years of experience, I came back to Singapore and finished my undergraduate studies. When I graduated, I decided to start Patsnap with the mission to make innovation better by democratizing patent information.
You started the company in 2007 in Singapore. What were the early days like? How many people did you have to start the company with?
Jeffrey: Back in 2007, the Singapore VC environment was not as robust as today. Fortunately, I got a student start-up grant from our university, The National University of Singapore. They provided us with a SG$55,000 grant and office space. With that, I started Patsnap.
Patsnap is now a global company with 8,000 customers and about 800 employees. At the start, Patsnap bootstrapped and entered China as early as 2008. Could you talk more about this early period and why was expansion to China a big focus?
Jeffrey: In 2007, after a year since our start in Singapore, our business was not really going anywhere. We did not have enough funding to finish the product and in Singapore back then, or even in Southeast Asia, the market size was not huge, that was why I decided to venture into China in 2008. It was also my first time to step foot into China. It really blew my mind. After being to the US, I thought the US was huge, but no, China was even bigger and denser! And after that, I went to a few cities with my business partner and decided to set up our operations in one of the cities and grew slowly from there.
In hindsight, this was one of the most pivotal moments for Patsnap, because Patsnap has a large operation in China, and China is also one of the fastest growing markets. But back then, I just thought that this is a country with a huge population and hence should have a massive market. I remember a Chinese entrepreneur saying that before we even try to do business or generate revenue from China, we need to pay our tuition fee, because China has a vastly different environment. To familiarize ourselves with the Chinese culture, we set up our development and call centre there. These were some of the reasons why we set up in China.
Now that Patsnap has raised over USD 15 million to date, and is backed by Sequoia Capital China and more, would you say that making that early move to China is one of the reasons for Patsnap’s success in China?
Jeffrey: Yes, definitely. Being in China helps on a few fronts. First, the Chinese economy grew fast and is extremely competitive. The people in China work very hard; we call this 996, from 9am to 9pm, six days a week. Our company does not go exactly by 996, but everyone works hard, is agile and is adept to changes. I think all these help to form part of Patsnap’s culture.
Patsnap was bootstrapped since it started in 2007 and did not really take outside money until an angel round in 2010. How did you know it was the right time to start raising money?
Jeffrey: It was a bit of both ways; there were times that we knew we needed money, especially our first round of funding. Without money, we could not even develop the product. At other times, we were not thinking about fundraising but were approached by interested investors.
You are backed by well-known names like Sequoia Capital China and Vertex Ventures. What was the process like?
Jeffrey: I would say every round of fundraising had a process of very intense due diligence, and there was also some serendipity as well. I still remember during our series A back in 2013, we went around the world to raise money – Silicon Valley, Berlin, London and so on, but we did not have a chance. Then, when we came back to Singapore, through my angel investor, we connected with Vertex and went through the whole process.
Our Series B was also serendipity. In 2015, we were thinking of setting up an office in the Bay Area and we were looking for office space. Our property agent’s boyfriend was working at Summit Partners. They got to know our business and we started the process again. I think there is a lot of serendipity involved.
In terms of due diligence, investors typically want to understand how big the market is. That is their number one criterion. You may have a great team or many other strengths, but the market must be big enough. The second point is your team, your background and your credibility. For example, how long has the team been together? How cohesive is the team? Thirdly, the product market fit and the operational metrics; more often than not, investors look at these criteria. As the fundraising progresses to a later stage, the more the emphasis on the market and operational metrics.
Is it accurate to say that investors care more about the addressable market and less about where you were operating in?
Jeffrey: Location matters because investors prefer to be able to connect with you anytime, instead of having to deal with different time zones and are physically far away. But yes, I think that the addressable market is most important.